Key Takeaways
- • South Korea's Financial Services Commission implemented measures on October 1, 2026, linking venture capital rewards to asset risk while mandating improved research coverage of mid- and small-cap stocks, following a consultative body meeting on September 30.
- • Seven major comprehensive investment firms supplied 1.16 trillion won in venture capital during Q2 2026, a 200 billion won increase from Q1, with the venture capital supply ratio reaching 19.5% of total commercial paper and IMA funding—up 2.7 percentage points quarter-over-quarter.
- • Regulatory authorities will closely monitor Samsung Securities and Meritz Securities, which received new commercial paper issuance approvals in September 2026, to ensure active venture capital deployment.
- • The FSC committed to strengthening securities firms' research independence and expanding small-cap equity research publication to improve venture capital quality beyond quantity expansion, addressing systemic gaps in institutional coverage.
Summary
South Korea's financial regulators announced coordinated policy measures on October 1, 2026, designed to both expand venture capital supply and enhance its quality in the domestic securities market. The Financial Services Commission held a consultative body meeting on September 30, chaired by Capital Markets Bureau Director Byun Je-ho, to review venture capital deployment by major investment banks and establish frameworks linking capital rewards to underlying asset risk levels.
The quantitative expansion of venture capital has accelerated substantially following regulatory designation of comprehensive investment accounts (IMAs) and commercial paper issuers beginning in late 2025. In the second quarter of 2026, seven obligated comprehensive financial investment firms deployed 1.16 trillion won in venture capital—a 200 billion won sequential increase from Q1. The venture capital supply ratio improved to 19.5% of combined commercial paper and IMA funding, representing a 2.7 percentage point gain. These metrics demonstrate regulatory success in channeling institutional capital into earlier-stage investment vehicles.
Beyond supply-side expansion, authorities prioritized quality improvements through structural reforms. The FSC mandated strengthened independence for securities firms' research divisions and established expectations for increased publication of research reports focused on mid- and small-cap equities. This addresses a documented institutional gap wherein smaller-capitalization companies historically receive inadequate analyst coverage, creating information asymmetries that disadvantage institutional allocators.
Regulatory oversight extends to newly licensed market participants. Samsung Securities and Meritz Securities received commercial paper issuance approvals in September 2026; the FSC announced close monitoring of both entities to ensure active venture capital supply commitments are fulfilled. This supervisory approach combines incentive alignment—tying capital rewards to risk-appropriate deployment—with accountability mechanisms to prevent regulatory arbitrage or passive capital hoarding among newly licensed institutions.
The quantitative expansion of venture capital has accelerated substantially following regulatory designation of comprehensive investment accounts (IMAs) and commercial paper issuers beginning in late 2025. In the second quarter of 2026, seven obligated comprehensive financial investment firms deployed 1.16 trillion won in venture capital—a 200 billion won sequential increase from Q1. The venture capital supply ratio improved to 19.5% of combined commercial paper and IMA funding, representing a 2.7 percentage point gain. These metrics demonstrate regulatory success in channeling institutional capital into earlier-stage investment vehicles.
Beyond supply-side expansion, authorities prioritized quality improvements through structural reforms. The FSC mandated strengthened independence for securities firms' research divisions and established expectations for increased publication of research reports focused on mid- and small-cap equities. This addresses a documented institutional gap wherein smaller-capitalization companies historically receive inadequate analyst coverage, creating information asymmetries that disadvantage institutional allocators.
Regulatory oversight extends to newly licensed market participants. Samsung Securities and Meritz Securities received commercial paper issuance approvals in September 2026; the FSC announced close monitoring of both entities to ensure active venture capital supply commitments are fulfilled. This supervisory approach combines incentive alignment—tying capital rewards to risk-appropriate deployment—with accountability mechanisms to prevent regulatory arbitrage or passive capital hoarding among newly licensed institutions.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.